Facebook’s MAUs Top 2 Billion, Eyes Q4 Deceleration

Facebook’s third quarter results topped expectations on the heels of advertising growth, adding tens of millions of new users in the period across all regions.  The firm pointed to a deceleration in the current quarter amid what it said would be ad targeting headwinds and said, too, that commerce initiatives remain a key strategy moving forward.

In terms of headline numbers, sales were up 29 percent even amid a spate of well publicized controversies over competitive practices, advertising controversies and the continued uncertainty of the proposed Libra cryptocurrency.  Total sales were $17.7 billon, better than the $17.4 billion expected.  The adjusted earnings per share of $2.12 were better than the $1.91 expected.

Drilling down into numbers reported in financial supplements that accompanied the earnings release, Facebook said that monthly active users topped 2.4 billion, up eight percent.  The daily active user count was 1.6 billion, up from 1.5 billion in the year-ago period.

Advertising accounted for the lion’s share of the top line, at $17.3 billion, up nearly 29 percent from last year.  The single biggest market remained the United States, where the $8.3 billion in advertising sales kept pace with the overall segment’s growth.

The company did not break out contributions from Instagram, but management said that efforts to roll out shopping and payments functionality continue.  Payments and other fees stood at $269 million in the period, which represented 44 percent growth from last year.

And, in a nod to at least some of the regulatory scrutiny, CEO Mark Zuckerberg said on the call that the investigations surrounding antitrust issues “are going to be about Instagram.”

He said, too, that seven years ago the firm did not see Instagram as a competitor, but as a firm offering a complement to Facebook.  Back then, he said, initial thoughts about Instagram’s scale stood at about 100 million users; the reality is that the platform now has more than one billion users.

Separately, COO Sheryl Sandberg said on the call that other efforts to monetize businesses, such as with ads housed in Stories, have yet to keep pace with the core news feeds.

Zuckerberg also said that this would be a “tough year” in reference to the ongoing issues surrounding political ads, free speech and market dominance.  The company will continue to invest in headcount and tech spending.  He repeated his assertion that Libra can speed payments such as remittances and micro-loans.

On a larger scale, management said that as many 2.2 billion users visit Facebook, Instagram, WhatsApp and other properties daily; 2.8 billion do so monthly.  He quantified the revenue impact of political ads, stating that those ads should be less than half a percentage of the top line next year.

And looking ahead, the company said that the fourth quarter will see revenue deceleration, though the impact should lessen moving through the next year.  Management said that the deceleration would come as user privacy and regulatory headwinds would impact growth rates.